This proposal focuses on pricing of three surgical procedures performed in hospital settings: colectomy (colon resection), lung surgery (resection) and a uterine (endometrial) hysterectomy and their variants, when associated with the diagnosis of colorectal, lung and uterine cancers. Procedures were chosen on the basis of being non-discretionary, with limited possibility for outpatient substitution, but having well defined transaction prices. The main research questions of interest are the dispersion of prices, the impact of insurance on prices, and the role of outcomes aggregated to the level of the hospital. We will determine the extent to which different types of plans ranging from fee-for-service to strict managed care are able to obtain price discounts from hospitals. Additionally, we will determine the extent to which higher prices reflect better outcomes as measured by hospital rates of readmissions, mortality, and complication rates associated with cancer diagnoses. Our null hypotheses are that geographic dispersion of prices and their variance is high, managed care plans capture greater discounts, and improved cancer outcomes at hospitals are rewarded by markets. The analysis will be performed using a large database of claims for privately insured individuals, containing clinical information and actual payments, i.e., transaction prices. Core data will be augmented by MEDPAR administrative data for estimating population based outcomes, and by other files with market- level and county level variables. Pricing data will be pooled for the years 2002-2006, with prior years used in other files due to lagged values. Prices across years will be adjusted for medical inflation. Various econometric and epidemiological techniques will be employed to account for insurance plan selection and for implementing risk-adjustment in outcomes. We will incorporate hospital-level outcome measures and insurance choice variables into price equations using a framework that recognizes that both insurance and outcomes are endogenous. We will estimate separate models for each type of procedure and for each of the two key definitions of price: contact (surgery) price and episode (admissions) price. PUBLIC HEALTH RELEVANCE: To date there has been a paucity of information on the distribution of prices for cancer care. In addition to filling this gap, our research will inform both patient/consumers and third-party-payers about trade-trade offs in making choices on the basis of price in terms of potential quality of care. This understanding will also help inform future policy decisions in a health care setting that is increasingly constrained by escalating costs.